2019-0798631C6 STEP 2019 - Q9 - Estate immigrating to Canada

Principal Issues: 1. Can the Estate designate itself as a GRE when filing its first tax return under Part I of the Act? 2. Generally, what information would the Minister consider to be “acceptable” information, in lieu of the deceased being assigned a SIN, for purposes of paragraph (c) of the GRE definition in subsection 248(1) of the Act?

Position: 1. Likely yes. 2. Individual tax number or a temporary tax number.

Reasons: See below.

Author: Robinson, Katie
Section: 2(3), 128.1(1)(a)(i), 150(1), 150(1.1), 248(1), 249(1), 250.1

2019 STEP CRA Roundtable – June 7, 2019

QUESTION 9. Estate immigrating to Canada

A non-resident individual passed away in June 2016.  The Estate which arose on the death (“Estate”) was non-resident at that time and section 94 does not apply to it.

On January 1, 2018, the non-resident trustee of the Estate resigned and a new trustee was appointed.  The new trustee was a resident of Canada and from that time onward the management and control of the Estate took place in Canada.  As such, the Estate became factually resident in Canada and pursuant to subparagraph 128.1(1)(a)(i) of the Act, a new taxation year of the Estate commenced at the time of the Estate’s immigration to Canada, and the taxation year which would have otherwise included that time, ceased.

The Estate will file its first tax return in Canada for the period January 1, 2018 to December 31, 2018.  The taxation year is no more than 36 months after the death.

a)    Can the Estate designate itself as the graduated rate estate (“GRE”) of the individual when filing its first tax return under Part I of the Act?

b)    If the individual had not, before the death, been assigned a Social Insurance Number (“SIN”), what other information is acceptable to the Minister for purposes of paragraph (c) of the definition of GRE in subsection 248(1) of the Act?

CRA Response

a)    Pursuant to the definition of a GRE in subsection 248(1) of the Act, an estate that arose on and as a consequence of the death of an individual can only be the GRE in respect of that individual if all of the requirements in paragraphs (a) through (e) of the definition are met.

Specifically, paragraph (d) requires that the estate designates itself as the GRE of the individual in its return of income under Part I for its first taxation year that ends after 2015.  In our view, this requirement will be met where the designation is made in the return of income under Part I for the first taxation year that ends after 2015 in which the estate is required to file a return of income under Part I of the Act.

In the example provided, there are no facts which suggest that the Estate was required to file a return of income under Part I before the 2018 taxation year.  Therefore, assuming all of the other requirements of the GRE definition are met, the Estate could designate itself as the GRE of the individual when filing its return of income under Part I for its 2018 taxation year.

b)    Paragraph (c) of the definition of GRE in subsection 248(1) requires that the individual’s SIN (or if the individual had not, before the death, been assigned a SIN, such other information as is acceptable to the Minister) is provided in the estate’s return of income under Part I for each taxation year.

If the individual had not, before the death, been assigned a SIN, the Minister would accept a Temporary Tax Number (TTN) or an Individual Tax Number (ITN).  An ITN can be obtained by filing Form T1261, “Application for a Canada Revenue Agency Individual Tax Number (ITN) for Non-Residents”.  The application requires supporting certified documents.  In situations such as the example provided, a death certificate would be an appropriate supporting certified document.

Katie Robinson
2019-079863

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